Private equity LIT trades at premium (not discount) to NTA and raises money without selling fees!
Russel Pillemer's Pengana Capital has announced a 1-for-3 rights issue, or capital raising, for its existing private equity listed investment trust (LIT), called the Pengana Private Equity Trust (ASX: PE1), which is interesting in at least three respects.
First, PE1 has consistently traded at a premium to its net asset value (NAV) in contrast to the vast majority of other LITs, which trade at material discounts. This may be partly related to the fact that there is, in fact, a bona fide case for giving retail investors access to unlisted private equity via a listed structure because it is the only way to access the asset-class. (Of course, the same case could be made with other illiquid assets like private credit.)
On this note, Independent Investment Research's Rodney Lay comments in a new report that "PE1 has been near unprecedented for an ASX-listed LIT to the extent to has traded at a premium to NTA, and even more so exceptional given it is a relatively low FUM vehicle (which typically trade at a discount)".
Second, Pengana is not paying advisers conflicted remuneration, or selling fees, to promote PE1, which means it has to compete purely on its merits. These conflicted payments were recently banned by the Treasurer, Joshua Frydenberg, despite enormous industry lobbying to keep them.
If PE1 can successfully raise capital, it will be proof-positive that good managers with a real consumer value proposition do not need to pay conflicted selling fees to attract money, which has been a consistent argument that I have made here.
Third, the underlying investment manager of PE1 is the Chicago-based Grosvenor Capital Management, which is a US$50 billion global alternative asset manager.
The actual portfolio manager is GCM Managing Director, Frederick Pollock, whom I know personally. Fred is a brilliant Harvard law graduate, who originally studied at the University of Nevada where, if memory serves correctly, he was such an astute card-counter at the Las Vegas casinos that he was banned as a student from at least one. The house does not like ceding its edge!
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Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 40 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha Managers” based on his risk-adjusted performance throughout his career across. He previously worked for Goldman Sachs in London and Sydney, the Reserve Bank of Australia, and founded the award‐winning research/investment group, Rismark. He has regularly advised governments, developing unique policy proposals. Chris graduated with the University Medal (Economics & Finance) from Sydney University. He studied in the PhD program at Cambridge University in 2002/03, leaving to set up his funds business.
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Past performance does not assure future returns. All investments carry risks, including that the value of investments may vary, future returns may differ from past returns, and that your capital is not guaranteed. This information has been prepared by Coolabah Capital Investments Pty Ltd (ACN 153 327 872). It is general information only and is not intended to provide you with financial advice. You should not rely on any information herein in making any investment decisions. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. The Product Disclosure Statement (PDS) for the funds should be considered before deciding whether to acquire or hold units in it. A PDS for these products can be obtained by visiting www.coolabahcapital.com. Neither Coolabah Capital Investments Pty Ltd, EQT Responsible Entity Services Ltd (ACN 101 103 011), Equity Trustees Ltd (ACN 004 031 298) nor their respective shareholders, directors and associated businesses assume any liability to investors in connection with any investment in the funds, or guarantees the performance of any obligations to investors, the performance of the funds or any particular rate of return. The repayment of capital is not guaranteed. Investments in the funds are not deposits or liabilities of any of the above-mentioned parties, nor of any Authorised Deposit-taking Institution. The funds are subject to investment risks, which could include delays in repayment and/or loss of income and capital invested. Past performance is not an indicator of nor assures any future returns or risks. Coolabah Capital Institutional Investments Pty Ltd holds Australian Financial Services Licence No. 482238 and is an authorised representative #001277030 of EQT Responsible Entity Services Ltd that holds Australian Financial Services Licence No. 223271. Equity Trustees Ltd that holds Australian Financial Services Licence No. 240975.
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Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 40 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...
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Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 40 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...
Expertise
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